Its Thrybergh site produces 500,000 tonnes between 16mm and 105mm every year. It is sold into Europe for use in general engineering products from screws to scaffolding poles.

Managing director Mark Broxholme said electricity prices - especially green taxes - were adding 60 euros-a-tonne on to bars and its annual electricity bill was £20m-a-year higher than the equivalent plant in Germany. Meanwhile, a strong pound - up from 1.1 to 1.4 euros - had boosted imports and was costing the firm £2m-a-month.

Bar production will stop when current orders are fulfilled and Thrybergh will focus on high-end products for the aerospace and oil and gas industries.

He said: “The government says it wants to rebalance the economy but manufacturing needs the steel industry to supply it. Everything here is recycled from scrap, it’s a green product.”

The Stocksbridge site was restructured in 2009 followed by investment in high-tech equipment to improve efficiency. The Brinsworth mill site had been put through the same process, he added.

Some 1,700 jobs were shed in 2009 alone.

Mark Broxholme added: “Today’s announcement is the next stage in that journey and will give the business the best chance to succeed in these fiercely-competitive markets.

“The consultation process begins today with our employees and their trade union representatives. Of course, we will seek to minimise the impact on our employees.”

Today, Indian-owned Tata employs 2,400 in South Yorkshire - that is now set to fall to less than 2,000.